Despite a slightly less dovish statement in February, we expect to see more focus on economic risks this time. We would treat such a change as a bridge towards a first cut in April. The chances of a cut in April are growing, as headline CPI has likely turned the corner, while economic growth has dropped to well below potential on the back of a slowdown in bank lending and fiscal policy tightness. Shifts in commentary would also likely hint at the direction of monetary policy under the current nominee for the CBR governor role, Nabiullina.
What do we expect from the regulator this time? We see the CBR leaving all base rates unchanged and issuing a more dovish comment, citing increasing risks to economic growth. On inflation, the CBR will likely highlight that February’s increase of headline CPI could be explained by one-off factors and that core inflation remained unchanged. The regulator will likely point out the deceleration in CPI as of 11 March and highlight that CPI likely peaked in February. A more dovish comment would open the way for the first monetary policy easing step to be made as early as April. Such a move would allow Nabiullina to step into the governor role straight after the start of the monetary policy easing cycle. We expect a mildly positive reaction on the bond market and a mildly negative impact on RUB immediately after the decision.